There have been some strange goings-on in the sleepy Welsh town of Lampeter lately. First, the Chinese flag was seen fluttering above the university's main building. Then, Chinese lanterns were spotted adorning campus premises on the high street. And a fortnight ago, the vice-chancellor was seen in a tie patterned with Chinese dragons.

The University of Wales, Lampeter, is the latest university in the UK to open a Confucius Institute - the Chinese government's equivalent of the British Council, Alliance Francaise or Goethe-Institut.

At Lampeter's Confucius Institute, the university's students, the town's 2,000 or so inhabitants, and scores of others from Wales and beyond will have the chance to learn about things Chinese, from the Mandarin language to the making of tea and the principles of feng shui.

The Confucius Institutes organise cultural exchanges, breakfasts to discuss doing business in China, exhibitions, and language taster days in local primary and secondary schools.

The institutes are popping up everywhere. By the end of last year, there were more than 120 in at least 50 countries. Lampeter's is the 10th to open in the UK since 2005, when the initiative started here.

Admittedly, the other institutes in the UK are in big cities. Manchester, Cardiff, Nottingham, Sheffield and Edinburgh all have one. London has four.

Chinese foreign policy

The Asia Times has described their proliferation as reflecting a "sea change in China's foreign policy". Others say it shows the scale of ambition of a country some believe will rival the US in world power.

However, cultural institutions are hardly new. The Alliance Francaise, Goethe-Institut and British Council have been around for years. But historically they have been independent. The Confucius Institutes in the UK are all part of universities - except for one that is based in schools under the Specialist Schools and Academies Trust.

Universities do separate their Confucius Institutes from the activities of their Chinese studies departments, such as teaching and researching Chinese politics. Nevertheless, some experts are not comfortable with receiving money to spread Chinese government propaganda, as they see it. The institutes are funded by the Chinese government's Language Council International - known as the Hanban.

Jocelyn Chey, a visiting professor in Chinese studies and a former Australian diplomat in China and Hong Kong, is worried the institutes are an attempt to convey a certain limited view of China.

In a soon to be published paper, Confucius Redux: Chinese "Soft Power" Cultural Diplomacy and the Confucius Institutes, she writes: "Scholars around the world already research Chinese economic, political and social development and have reached generally fair, unbiased and comprehensive conclusions that have been well publicised in the international academic press. The Confucius Institute programme, in so far as it supports culture and outreach, may be valuable. In so far as it aims to promote academic research in Chinese studies, it is fundamentally flawed because of its close links with the Chinese government and party. At best, it will result in a dumbing down of research; at worst, it will produce propaganda."

Not so, says the vice-chancellor of Lampeter, Professor Robert Pearce. "We have seen no evidence of the Chinese government using the university as a propaganda tool through the Confucius Institute. Lampeter is a relatively quiet place. Our belief is that we need to offer an education that gives us an international and national reputation. Our future and that of our grandchildren are going to depend on Britain trading with China. If we don't build links now, Britain has a very bleak future."

Professor Xinzhong Yao, director of the Confucius Institute at Lampeter, agrees. "We make it very clear that we are independent of the Chinese government. We will not compromise our views on Chinese politics because we have a Confucius Institute." But it would be naive to say that this wasn't an issue at all for Confucius Institutes, says Tim Wright, professor of Chinese studies and executive board member of the Confucius Institute at Sheffield University. "China is less democratic than Britain or Germany. And because there are partnerships with universities in China, the independence is less clearcut. But the Chinese government is well aware of the danger of Confucius Institutes being perceived in this way. We are given more or less a free rein to do what we want. We ask what the weaknesses of China are, as well as the strengths. Someone who wished to undermine China might not be welcome at the institute, but then the British Council didn't exactly put on talks about the IRA."

Dr George Zhang, director of the Confucius Institute at the School of Oriental and African Studies, University of London, says the institutes are simply the Chinese government's way of making new friends. "China is not trying to take over the world. We don't have those sorts of ambitions. We invented gunpowder, but we used it for fireworks, not for missiles. The economic growth is there, it's about making friends."

Most of the institutes seem to steer clear of Chinese politics. Many, like Nottingham's, teach Chinese in local schools. The Confucius Institute at London South Bank University, which opens in September next year, plans to run courses in Chinese medicine and Chinese massage. Soas offers classes on Chinese calligraphy and how to make Chinese tea. The London School of Economics Confucius Institute, which opened in September, aims to promote Chinese for business. One of Lampeter's goals is to get 30 to 40 more Chinese students to its campus a year and to build "a bridge between China and Wales".

Financial uncertainty

Indoctrination may not be seen as a potential problem, but financial stability is. The Chinese government gives each university approximately £50,000 to set up a Confucius Institute and promises the same amount for two more years. But what about long-term funding, asks Shujie Yao, head of the school of contemporary Chinese studies at Nottingham University.

"There is some uncertainty as to how the institutes are going to be financed long-term," he says. "In Nottingham we are very keen to make the institute work - it's part of the university's strategy. My worry is it will take too long to get the institute into full gear because it is hard to get teachers to come and there is a shortage of Mandarin teachers."

"I share this concern," says Yao of Lampeter's institute. "The Chinese government has set aside a lot of money for Confucius Institutes. But how long will that continue? I worry about the institutes across the world. What will happen after three years? Will they continue to send teachers from China to our universities?"

Wright says: "If the expectation is that the institutes will self-fund after three years, that is totally unrealistic. The Chinese government has to accept that these institutes will require funding for a substantial period of time, 10 to 20 years perhaps."

Confucius Institutes in the UK each have a partner university in China for teacher and student exchanges. Relationships with some of these institutions are already under strain. Sheffield University says it wants more say over which teacher is appointed. Nottingham University is still waiting for its teacher from Fudan University in Shanghai to arrive.

These are mere teething problems perhaps. The first secretary for education at the Chinese embassy, Pinwei Qi, says: "there have been no problems. Many people want to learn about China and the Chinese language."

For the moment, Confucius Institutes are flavour of the month. And not just in education circles. Sheffield United football club has expressed an interest in hosting the next Confucius Institute business breakfast in its city. If a top football club sees the marketing potential, it's got to be worth universities giving it a try.